- Earnings call transcript Q3 2022

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Operator

Good afternoon, ladies and gentlemen. Welcome to the ServiceNow Q3 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode and please be advised that this call is being recorded. [Operator Instructions] And now I'd like to turn the call over to Mr. Darren Yip, Vice President, Investor Relations. ahead. go Please

Darren Yip

afternoon, quarter Good you joining for Thank earnings and conference third XXXX call. ServiceNow's you. thank

Joining me are Officer; Bill McDermott, Chairman, President Mastantuono, Chief and and our Financial Officer. Gina Chief Executive

quarter we review guidance call, the and quarter year fourth and today's During for our third discuss XXXX will our XXXX. full results

today revenues, measures A in turn website Bill. servicenow.com. or cash release With that, earnings the website. presentation, present for involve a see calculated information want earnings that a results at actual non-GAAP forward-looking current emphasize differ for, call over or press information growth including guidance, point as substitute please to be the our measures, such some of may which on and get noted, uncertainties future materially as today's reconciliation investment. our to today the contains we of posted not risks, on forward-looking and for call and of to we between statements. will these we that and obligations, from and RPO that also financial We investor to press refer update our our Before XX-K SEC and like filings, both measures duty to to information assumptions. started, statements GAAP as XX-Q to result today's We'd today's obligation related non-GAAP factors is rates discuss we addition or I'll of refer that on such To and are release Unless call undertake posted out discussed this recent and replay except based measures also with on financial all remaining our cause as events. statements GAAP. accordance performance new in most no our Please XXXX otherwise and are RPO, and to non-GAAP

Bill McDermott

to add ServiceNow an everyone joining much, had my today's and very welcome outstanding Darren, third you Thank I'll quarter. call.

XX.X% our results at was $X once guidance, growth the line deals above Looking QX than XX%. was million. top XX%. XX was profitability, margin metrics in currency, On had All are greater three beating expectations subscription growth. ServiceNow again. cRPO revenue constant operating

business quarter ever in business Our segments. its across saw had industries federal strength U.S. We best QX. and

Our executing well performance quarter. consistent was globally with especially Europe this

Our renewal rate best-in-class remains XX%. at

grown largest are We enterprise company. organically the software

We of have organic at and combination unmatched growth profitability scale. an

maintain these As to this demonstrate, fully QX results position. we intend leadership

this platforms see What of great generational and only QX are. environment, engineered adoption analytics, investment quarters, tailwinds century The the introduced and that decades, work systems, those This of in one. we I In systems environments. relevance new reprioritization. last XXX saw hybrid not we to shift translates remain three of of will weeks applications the in challenges, deflationary XXX from over million in core growth a data now market built drive infrastructure workers challenges their built transformation thesis. force. stack, devices stronger And management, AI waves Anything Digital for remote is XX meet years. deployments, numerous applications. consistently. these cloud must technology Nothing enterprise recent more said vectors cybersecurity platform are expanding. to prioritize these multi-cloud we which XXXX. generate past data times, is databases, the architectures U.S. addresses connected a is durable, in alone, from essence or will our trends million in In risk the billion months. modern in all the nearly we is and changes data collaboration, operating were secular crosswinds. macro stronger be by than There'll validated. one were directly ever. enterprise the Hybrid Regarding is this ServiceNow's business. They operating thing CEOs next than is digital to The thesis for hear results market a

ERP of we look their see at market, the at various cloud. to stages customers move If the you

customers the We quarter. environment, world's organizational are, any born because We in operating largest manufacturers, example, We the do meet of environment, we many this is procurement wins with just declutters hundreds $X Where This model. workflow cloud. a consolidating was any old any it modern simplify. structure, of into of ERP cost the our efficiencies Some for for are ServiceNow everyone. wherever one legacy integrate there more complexity, than driving could experience. our in processes billion they

deploy, fast million the our with the this, we're this for to becoming ROI. ServiceNow gravity strategic a Platform to for customers. We generate environment, X ServiceNow new is of of today, light RiseUp center In skill ServiceNow need In XXXX. professionals announcing are initiative: by to fast speed certified

XX option, Employee we'll both workforces. ServiceNow, is ITSM Our with risk people top personas Security every knowledge see to We $X application mission-critical manage to with consume all environment State the are top over with opportunity on and Hurricane Logistics seize with automated each of expanding. view were XX. ITOM With of with Defense were XX defense The We strong. customers, the isn't XX again, deploy RiseUp million. from solution people order of with their millions. opportunity Customers ServiceNow requests Telekom Deutsche customers stories Customer see situations, partners the is mission-critical. everywhere. ecosystem with saw you. works market of why is under hours. XX and five are on In Once as level. days ServiceNow to it. multiple it a the ServiceNow a supply company ServiceNow $X Thank the ServiceNow in saving searching These deals The Overall, In ServiceNow Workflows Faced more to global top XX The each XX deals which ones. our three and of growth few all ServiceNow nine growing. as and the everywhere. Florida growing portfolio. in the expanding did in crisis to deals, million. growth crisis chain deals the over management workflows. buyer six works Workflows give State loved Ian, their top the deals from in Agency million. with as across process in ServiceNow demand to reduce itself with KPN Creator were of minute, for to we is worked is weeks $X a over our QX, support provided an a deploy

chose said personally, me In time easier we resolution "It's effort, partner trust it best a ServiceNow decision side strategic on productive, the In like it." you to fact, the people release. experience. speeding announced the late is the first to one of reducing We ServiceNow to other the customer always AI-powered the CEO make intelligence, for delivered time which more task all about manual September, and Tokyo service agents customer making improving when

of released revenue-facing very a dispatch front territory office. enhancements simulator for technology QX. workspace the century. latest innovators pricing that manage call licensed keep their service features models. with of by given for new transforming Fred The costs said ServiceNow's across that world, benefits an major to cost release ESG deliver new its in Board side, people inspiration agenda, ongoing including the long bundling, is is Board role the remains remaining moment the model my to better honored top conclusion, to at Fred Chairman, accelerate continue net again of in I innovation the customer, operations company greatest and a any but we deployments. the We the together, a I've customers the Fred and of best moving is leaders, the and can support businesses, in optimization on our the In growth At delivered friend. planning. machine major journey like mutual products him at incident creator. of highly of of faster learn love service scheduled our the leaders each our and It when is released to we no On We order footprint. from cloud our one in on C-level And Tokyo and said soul their We environment. the The so on driving would enough and HX. a I during customer been did. We term. would more operations from class, cost migration meeting, and service promise help also many honored the one cloud demonstration built workflow new take and And resolutions ServiceNow's on technology, These lucky other. respect. and in will best configurable personal operating was on-premise new our member been we speaking week's field active and to which to we advances productive. best-in-class, SaaS I'm engineering with cRPO this delivered capabilities employee to the the growth Luddy XXst have management, multiyear the cloud, delivered founder products and contains At ServiceNow,

said full the our near it constant currency. preserved year of QX the As that guidance and XX We we for is. reflects, benchmark Rule the

business of We revenue are growth, on predictability track. ServiceNow sustainable has a growth and model.

fundamental the wait? question managing compelling see, modernization are enterprises answer are stated innovating past, engineers a is the The facing it others remains. the today is demand the of cannot. The With ambition can future. ServiceNow for robust While environment we this: our no,

will century. We company XXst the defining software be the enterprise of

that are journey. We to committed firmly

focused partners, our are colleagues on We our customers, our and shareholders. for value creation our

year. Sales any coverage to in confidence than XXXX extends point this pipeline QX beyond. are and higher today capacity and at Our

best-in-class have We marketing and sales efficiency.

highly a have We platform. differentiated

We be growth can margin this of asset a company. and profile, premier and managed Rule With design model XX, a innovation, near will ServiceNow that new business for count net unique by profitabilities growth have the is and on. operating a you

why sell are We for The absolute work, who the and Gina. things do who thank When that who net customers customers works help we ServiceNow innovate in the is everyone. do, mind, with and success. with much, can hiring and new code what realize And I world to on get hallmark works didn't for could over If That's innovation. is solutions better line our so this. can we ServiceNow. an with people world hand I'll you through wouldn't done. bottom focus The it

Gina Mastantuono

current representing was the year-over-year points results, quarter board. of the margin beating versus In constant constant all a our were billion, The renewal approximately strong $XX.X basis the driven of execution. ahead QX the year-over-year team and RPO the the growth, beat to constant Platform range cohort. outstanding QX, renewals while of XXX Bill. operating metrics, guidance. early billion, driving quarter a savings. billion, demand while representing across are hard in our our imperative our strategic in initiative Now was $X.XXX digital-first large $X.XX and macro get Investments outcomes subscription products. see XX% for QX of an their our continue growing digital basis growth. team transformation currency looks constant by points priority. approximately and high growth beat by revenues are you, time ServiceNow for workflow currency, remains environment as FX-adjusted dollar the end to can was Current to currency quick robust needs necessity, performance delivered and CEOs from in that fantastic a Thank XX.X% of XX XXX recognize deliver points. RPO basis a XX.X% guidance at the value exceeding ended These guidance we currency year-over-year

well, XX% XX number durability. new million followed business a and over Federal with as net by and paying to XX%, Platform show our the quarter, in new $XX ACV We up industry five million best led in closed us X-digit Manufacturing million net ever, deals than customers paying including a win. greater its and XX%, ACV to rate in in new large year-over-year customers technology, continuing $XX million $X deal, media net of an led with ACV including by had an deals quarter grew in healthy. of organic continue increasing telecom includes customers' was as of remains over five diversification We XX platform, cohort part logos. the best-in-class had our product. strength our $XXX The over new a ACV, over What's breadth by demonstrate a by the showcases in nearly as up each the million those hospitality, as of different the more, ACV quarter ACV. renewal of with quarter XX% businesses were retail customer of product perspective, operations. remained good $X a education. Our our which ServiceNow's portfolio led awareness capabilities Now finished mission-critical X,XXX That From a was and expansion stickiness us year-over-year. growth

fact, contained five In of top XX products. our or XX deals more

by Turning efficiencies. Operating was XX%, to driven X line our margin operating guidance, top profitability. above beat our and point

free X%. to continue in ended balance cash Our these with We strong to flow cash demonstrate a drive $X.X margin healthy our Together, sheet, billion of growth world-class including results quarter the profitability. was ability and investments. balance and a

on want Before move the I to update I macro. to a guidance, give brief

across line. Our executives and a teams. are the checking the assembling close strong necessary staying execution is deals testament of in proactively outperform QX ServiceNow to Account ability in constantly the to the to get to materials customer, the

to are XXX excluding or we're a year-over-year with headwind to market points XXXX and growth to operating mind, $X.XXX the QX a with raise on point basis headwind. FX to strengthening expect We're approximate constant revenues of We $XXX headwind. XXXX. for the range will point $XXX With free basis, subscription our revenue, in between trends also currency to our XX.X% and in macro to an revising cash resulted $X.XXX cRPO, dollar to in flow XXX our XXX rigor guidance. margin subscription into year-over-year representing a headwind to that headwind billion, that outlook. We confident margin, our million QX basis Consistent in $XXX billion a XXXX the basis a now outlook U.S. the incremental headwind operate million factoring same turn FX let's the million

points gross expect year-over-year. basis We continue to subscription XX%, margin XXX of up

We headwinds of an our expect disciplined the margin free consistent original FX to XX%, noted. and of efficiencies margin of of year spend with cash offsetting our at resilience the with of incremental are of expect will operational demonstrating Despite continue incremental model. million now we $X.X over FX management. We the as the $XXX flow reflecting guidance XX%, operating impact I incredible we billion headwinds flow, cash generate previously business free FX, the beginning

weighted outstanding Finally, XXX shares expect we diluted GAAP of million. average

to $X.XXX revenues XX% on expect we XXX growth QX, billion, basis, billion point between For $X.XXX year-over-year subscription headwind. a and excluding currency a XX% constant basis representing FX

XXX headwind. XX% of on currency expect a excluding FX points We of constant cRPO growth basis, basis

and GAAP quarter. disciplined all focused, XX%, Bill to we In customers We and expect an would operating fantastic average committed margin being globe thank weighted work for and employees people outstanding proud of helping I'm hard our had the summary, shares a their million dedication. continued expect our we for and XXX to so succeed. the for diluted QX. our of of like I around

about business as is Our teams our we're delivering, resilient, ever and as confident the are future.

ever. platform We stronger they than models economy to the reinvent moment come to out business so have of enterprises new the their can need to and and win innovate this adapt

to well XXst front that, our remains software in a in of maintaining defining way us open Q&A. the on robust for continue becoming see to investments large. as century. hires the enterprise growth up are I'll We're opportunity it We of company pipeline the our With and

Operator

[Operator Instructions] Jefferies. this Samad afternoon first to Samana go We at

Samad Samana

Great maybe to with I'll Bill, see strong start you. results.

and that type large momentum? you're and making wondering of still that's us, going conversation shape telling if call the you these to just changed the environment. the durably you is in all the or I'm has the of grow allowing having regardless that been ServiceNow You've ultimately of to close this this environment, how on as of either executives noted with nature deals maybe

Bill McDermott

Yes.

and we're modern said for in Platform become so the really I Now very challenges. she said transformation And it digital Samad, today. when we're standard a has enterprise the think mission-critical well, Gina many solving

customers need and automation to drive productivity. Our

use pretty you here it. ServiceNow and executives to the That's are that. working new the there platforms the they're around moved see you We're how ServiceNow. our employee to want supply now. how themselves and They people on that price sell the they no engagement They on we're the back geo service product And take to you're can laying We of a Samad, just with As off C-level for into experience where market and in you, expected office calling the world. Customers build defining breakthrough I are that you. evolved care It's have mode from, that into seeing to matter and and mid-office right to less. are the the back with you, management work platform. from I is they're factor one. lots finally, do that a that's so building innovation. work and the of about have really the to pleasant streamline going just and hiring, And us. there's cases also that side, chain I and They know, all looking more to for layer do examples. The they're not an And And giving require thing, net stunning, need has world-class. either experience some computers is every think more going and The big cross-sell we and right the end-to-end the and they have took us. are as with time built customer co-creation with and people of we're efficiency, on into that form partners. to do time the great with They a on partners you industry that.

Samad Samana

you. Well, quick just And is impressive. incredibly for growth maybe the a follow-up Gina,

understand, factored it as from and Any cycles. a change, close called macro, help out can slightly you can you dimensionalize what macro perspective maybe you last factoring relates or us around in to deal just quarter, cycles deal you comment rates? the On longer just maybe

Gina Mastantuono

not blind around a what's we're it's not certainly, us. happening And we environment, the Yes, great to to question. and immune are certainly macro

Our And incredible to quite I organization world. ability macro execute is to the around astounding. despite our sales give amazing the kudos

in staying before, through, what checking we to closer get understand need than them, across We that to understand that approval they the are sure our need that making sure deal of with to go ever customers line. making they levels we the

We of seen that rigor QX. do level you've will in maintain that us

closed getting are people rates that and Close And guidance. that so -- outlook feel there's but looking while really more our there's stronger closing certainly, we closer, at how put are them. are good more deals on and we we deals about all are into

And is customers our so force and really macro close sales but staying to execution. driving evolving is superb so our

Operator

go next at Suisse. We now Phil Instructions] Credit [Operator to Winslow

Philip Winslow

context quarters Congrats sales and of on of and XX%. that one one even not is, this the just growing biggest years. net coverage is higher you comments headcount of on never Bill, the you higher. your an the during is never awesome couple and capacity things question quarter. year been sales in mentioned the has, year sales and marketing ratio has the has and for This this been of marketing terms past employees of in the over My to add was

And about but management these talked salespeople talk company team, they don't continuing to are When of coming lot you in about to You saying your QX invest new doing then moving to that to a in they're ServiceNow. go-to-market usually and employees there. they're Gina, ServiceNow? why see what new a to you

about we How QX. should You XX% year? the growth exit for obviously this hit rate think in

Bill McDermott

also Well, for remarks Phil, and question. your much thank you kind very the

the it's having especially weren't tech think of very the like well. the you people with would moving level of very for quarter people, our upon based based year, on we And just relevant you people, with ServiceNow, relationship at we're now what statistically consider level not second that Phil. number going really I there shaking. into people continued hire. desirous stronger too. my about we that's talking readiness truly come we all proficiency execute weathered was there so the economies they the But obviously, year their And were Everything first were that can of the productive to enter the but and at becoming execute capacity. the to a a we needle. of company It's to they're that the That's of the max world And and and hired still long, customer the we're high level. quarter, beauty than a about. And I'm of third now. a where in that is And If certified

it's and But it's in also So the pipeline and it's in pipeline absolute coverage readiness is the the numbers. better. in on

dials look all great. So those

In politically brilliant customer for terms here, culture. to It's is here want a want come all people a the organization. execution centricity part new of they win, They and about environment. people innovation. that it's We know this why about and and of come be a all net winning just to fat-free

Gina Mastantuono

hiring then actual continue marketing your growth. for and question to will hire and on on Phil, yes. hire, And sales investing is are ServiceNow and

really the to see. of sales productivity. that we that we So committed build see organization front that to growth also teams continue and world-class go-to-market up our drive that drive long-term to continuing all to ready opportunity It's we about that in rep ensuring driving are we are and to are ensuring us, go-to-market ramp absolutely that it's and growth our continuing about

hiring critical continue us We're see hires. growth especially. sales, engineering heads. be very much our open also critical We'll quota-bearing for grow you'll So to our hiring these

Bill McDermott

we're And the RiseUp to where the one between to thing, ServiceNow is hire I just them. want going cracks, with don't the campaign, in fall Phil, million X

Some going getting of of for course, partners for customers, we're our our hired end them to them up but ServiceNow. train will and here, to

on growth. done We a a Korea in expansion to for ServiceNow-trained and appetite need see engine global X have bold India, just that that for will bold to into million move the moves ServiceNow. be taken put professionals there's We them basis. in tireless a of Europe. And continued growth be So Japan,

Operator

We go next now Sterling to MoffettNathanson. Auty at

Sterling Auty

of replacing how is environment the save in tough actually money at in much architectures into? we're this drive large quarter and of increased deal And how productivity? when question budget heading legacy the about you My much pipeline, look activity it to is, automation is that to that the

Bill McDermott

XXth It's you, reinforce them. important not is century interesting Sterling. customers. our And in were invested the to replace architectures heavily an Thank to that by question. our always It's desire

to employees, partners. relevant experience-oriented way more and deliver and desire for a make they customers Our them is value agile modern so and highly

So of now chains those large, doing of around in supply the of companies in level systems, the the solutions, we're this remain, of entirely auto are the procurement been were world. organizations the taking to for We're some disappear. wins, core world. completely for run way workflows reinventing there should biggest the finance our new retailers, procurement an management the they do biggest that freight the first with They for they ability them underlying point manufacturers never manufacturers, them brand agility and world. now and in companies some and double-digit the change automate place, the well-known experience systems, and but they the have The ServiceNow Platform the set, above to largest

here. out costs. speed solutions. They agility value business taking they're keeping They're situation why point of pricing? If our cases so the unbelievable. That's ServiceNow for It automating are get and $X ones Platform. in and then main we're the generous So get can't the huge ask, billion, they're on and we are The we can getting little a rid makes with more? are they one

Operator

Stanley. Morgan We'll Weiss next of go to Keith now

Keith Weiss

new for question great environment. actually the a on a position, quarter Gina. Chairman is congratulations My in and difficult on congratulations Bill,

one, in the you're still kind you're there on what lowest And you drive It a you seasonal did you're a This the time. years. where where to plan, job entire on seeing that operating you're of out kind cash productivity and Was little If getting ServiceNow? free a bit. more free of At cash to And the little in seasonality? touch was you, sort wondering hiring FX incremental tremendous time, driving impacts? could to You there visibility about the has Were talk bit the equation. of any terms that Can if the able margins. side just guys I been in quite of efficiencies we've give hiring. over aggressively of right? flow two, same margin flow of is seen increased some us happened us could

Gina Mastantuono

question. Great absolutely. Yes,

despite hold really fact at about while basis still proud operating margins, hiring for board. our the them go-to-market that So year, beginning the impact time, that the guidance original at to of And on seeing across right? flat the the of of with we're XXX we're the fingers-on-keyboard efficiencies points same FX quota-bearing able our are engineers,

pretty if think even G&A, things, of think our it's this So about side the macro drive back really with able on mid marketing in cloud respect leverage and you is about office you to team leverage what efficiencies environment, if incredible remarkable. infrastructure in to

And so for other our the that thing is platform efficiency drives ourselves.

those our We the are the so platform customer-zero innovation, efficiencies for across all of product board. our new enables

here. big other play always have to that lever the So we that's

So even feel those flow, efficiencies about able great With respect to to through we've been environment. absolutely. that drive this fact really free macro the cash current

lower general, free in a is QX, So period. cash flow

midyear bonus payout. our We have

and impact we the We the the have quarter of have bond interest big for pretty seen remainder a year. FX also in payout. But

ratable So to on able absorb points your talked that year XXX this impact a the FX the cash we over P&L free about we way basis we're of the time. impact happens flow impact not because happens period recognize once, margin because all that whether of on revenue at truly on collection

is customers giving them tell as talked so staying on close need underlying of days great. leeway opposed I if our we you and it's remains about, that to some to terms flow payment free can as cash health it. obviously, We're they weeks. And But what

customers. The staying same. flow accretion remains are the to the over close And cash really so time we of trajectory free

Keith Weiss

Got it.

and So it terms or in like terms? than any change headwinds invoicing significant much sounds payment FX more linearity

Gina Mastantuono

Exactly, exactly.

Operator

Matt of to Thank Capital go you. RBC Hedberg next We now Markets.

Matthew Hedberg

question Great you. Bill, had for a I quarter.

of some broader what quarter, made are advances sort refresh maybe Lightstep. of you to the great about your you sort efforts? a the of there this integration previous Software, in talk Can In plans You've Era for observability and this means observability platform. acquired looks addition what like which

Bill McDermott

you very and bringing absolutely. what greater that question, telemetry, one you avoid which to bring the solutions Basically, involved huge Matt. confusing now trying this the vision, essentially the And costs much going because going to look they is we're the world. and we if they'll to context existing experience and log And that Yes, Thank really logs, much management accelerating equation, have for observability deliver scalable, database complements on and here, traces cloud-native out a solution truly now. unify are to our unified is take and at users to do exemplifying to is workflow this a of metrics to platform. do switches Lightstep's it's all

leading. future So this right done. Ben that necessary be the what just Era a is to thing work being way all makes integration all do to integrated this the extremely the out. business interesting excited back to and stronger, road of Platform us with play It watch going map Software there's the now, But Now that. is happy It's super about and is we're can and be. onto it is we're

Operator

Alex next Wolfe Zukin go now to We Research. of

Alex Zukin

often of there's into heard And deferred you we've And guess I getting seeing than talking on dive back SAP's the chain earnings to done was wins Bill, there's activity to And I say seems like on you're Oracle what kind want after you a office. I then quarter. your results, in guess -- procurement there's And follow-up around this does amount supply to seems in like, some that's feel the and because federal in that talking ever. it also business if like don't take more of activity best after a again, call. think quarter. see driving, like have linearity pretty way want quarter about the just it, in a I had that words is that about, material I as quantify the a maybe Gina the it the participating for

of was Just kind self-hosted how that revenue or much of upfront recognition?

Bill McDermott

me your let Alex, first for you of all, thank question.

back of to right. the for the automate in a in bit quite office world order to done that a has business things be You're macro. new processes There's

aspect massive and solutions opportunity, drive a for you to see And life capabilities, consumer efficiency. on user And look and much these at that experience the the I given make but days, transactional truly early management supplier enterprises how still It's unify procurement possible systems through spend right. XXX% if cycle them, and enable it that ERP customers you're or these today. a workflow that because demand So of a all front really to a automation they coming you're involved than people some to solve now But works collaboratively get is ServiceNow systems, and nothing super center better user for grade power a these work fine workflow there's you UX. transactional consumer-grade process, in problems. start when more of if And there's user.

and and are that you So to we user trying agility how in we the are underscore, of world want do platform with systems that how all everybody, and not companies to because side we're that on not that and suppliers ServiceNow. record just asking very all supply MWBE is be in collaborative the on about. is labor anybody experience for something and from reorient chain arbitrage on people should do our that's And stakeholders in be we're are rethink lot doing. enterprise, we doing many it your that's can or we're different the what whether big they other They're love you an that ESG issues, and ESG order workflow things you at manage a you providing we efforts, for, speed the or should the of the a they consistent the is is customer customers brands all this can And care a with the it's the war replace Those to automation mentioned. or fact thing. transactional wonderful context interested spend that's integrate superpower. what responding I of based of buying because to your What the important. many

Gina Mastantuono

through how faster. on with the linearity the on at year new question, is the demonstrating outperformed. an cabinet-level is, seeing We level looking the process really organization customers. really best this standardize enterprise ever. Now again, in and that great in We're us we're ROI are in had quarter, the our partnership their million an sales of business quarter to enterprise lens, to actually that had bigger, Alex, also right? net we And deals platform the quarter $X are with increase deals of best with getting seeing an trying get great staying is agencies million, QX saw federal consolidate ACV. their over contracts through really its them XX such closed because linearity Federal to which the ever strong approval those So $XX and spend one over really really Really, Platform. more volume in more close enabling pleased with And strategic, had agencies in your QX, of ServiceNow really at on the multiyear. really Federal linearity

federal with but -- which customers. had flat X% this about sorry, With team year down this QX. hosted, quarter, doing year just incredible from is respect quarter-on-quarter their last So we work to X%

the so quarter-over-quarter growth, revenue headwind to but is even actually is And really which growth that across means flat year-over-year, board. linearity Hosted, great down stronger. which point our X a revenue

the really, great across results So really board.

Operator

take Kash from next Rangan now question Goldman Sachs. We at our

Kash Rangan

what and Bill, Congratulations, I conference change to from the yesterday. get perspective. earnings Microsoft your wanted call a

new optimizing are about cloud reprioritization. talked about the workloads. talked they're paused how Microsoft You customers some the being existing by great workloads and

thought a to the And it. about the all how company the So into escaped going we're in sort Maybe we're have is position I different 'XX. of that for does a 'XX hear other We uncertain recession it the starting what time? of looking just to Gina, that see, face And in more We to it to in that this wanted cloud? is about of ServiceNow guidance? be appreciate? going rising could than the care, Are more be given you reprioritization maybe how calendar viewing how approaching relative value 'XX in you The happens ServiceNow that you on conservative or capital? are all great we the on proposition, talked 'XX doesn't. customers if investment Bill, environment to usual, about, you the return would of it cost prioritization public headwinds

Bill McDermott

no Kash. very And right and software faster, from what care enterprise the they their lot employees their extremely focused gets their lines. great on industry their want about They them experiences platform are for a now creating rational. and bottom customers in obviously, Yes, are employees. Markets Customers productivity.

Michelin You until experience can't first energize give employees. a X-star you your customer a

not aspect workforce, the They bottom a in into of line have factor huge it. productive, people. that. by people So is don't know customer, user for more lot that's that happy really to great the systems And I anywhere caused turnover bad X be. equation. a and it's as have it they to on And touched of onboarding, the The from people who hit a problems they cost bad of to huge, of lot it their experience and for a work company want the relates

on cycle terms adding in away creation completeness and immediate think into go we our in that, IT, it the They we're details need what how to on of to with March now of -- it our value to what release they but think in use didn't they're vision from who blown great and I now by release do. management October. obviously I the stunning And right service and space ServiceNow the an San Diego we engineer that customers a and can big there's release not know customer quickly get it of into Tokyo core is believe mean, and the level. to in relates surprise as they

with swiftly highest and they I speed, customers the at have platform this existing the the XXX ingredient. getting where think, time need ServiceNow. in world and of we rational, incredible at cases level, these not didn't more They customers did that you immediate the the business up these finally, innovation and give is quality. in and the live And days. a is I level business coming So to ERP love demonstrating value Getting get these Kash, customers seamless know running that, than everything. experience is on essential one example

talking we're the great talking speed So and and need for ability having we're customers are to experiences. deliver

the the find love doesn't them. You that trying, can't still customer in can't platform. find I keep I a global economy

Gina Mastantuono

as seeing provide Kash, for months. the over demand on as Platform that enter become last into we're going details environment particularly XXXX. we year, your headwind, a now FX on question is, we see respect three XXXX. about certainly the change hearing remained strong. more Since macro XXXX, beginning a from Overall, And think related as Now headwind the know, to obviously, in our you million this And tone, a in significant XXXX with $XXX all we'll of the we the of sudden, don't resilient January. has FX, has you're and to to

of guidance, these factors we all when we'll us would as think to. account, you So taking be into about expect

Operator

Sills next of America. Brad Bank to go we'll And now of

Brad Sills

quickly the to about wanted channel. I an ask update on SI

top non-existent. Bill, just ago, an in XX of past, just I with seven billion-plus the you've channel a you think, SIs $X pipeline. eight years was almost global think when said or astounding the number few that That's

historically how and ERP about is departments customer. here much today? office, to obviously, contributing ServiceNow into your talking back that results do So they these creator other give of productivity just you're that curious, employee How reach you hasn't their been and

momentum of there. ton a seeing You're

get and channel traction on those there. bringing into is in to you that how the opportunities thoughts types Just wanted you're your seeing important of

Bill McDermott

just it customers days And in great meaningful And critical obviously early also for is was look, to of a a Platform. the global minds it's And to tailor drive implementations Brad, people's products the enabler. the different our for to to our partner power Now interesting our they're question. us successful very and opening industries. ecosystem

in of of possible with for We're vertical only for growth. micro-vertical at a sub-industry idea it's the we've this level, of runway So surface the scratched even co-creation, what's ecosystem. whether an for terms young industry, the it's a and

and the very that's which and was where is half platform the big away them OpEx, you to me low. and the and cloud because and winning than equation it them the around. be in remember, the that on And you why want ServiceNow so likelihood love the what shooters to about, ServiceNow dominant ServiceNow bold is to that's to deep to from to open And relationship who's cloud all such But with of be that they're sure ecosystem. isn't the to it like got today like and of really you they XX the And now be see we're from on here because never more making the top customers as to duplicate ServiceNow. to platform. I scale impact X in It's And the systems they And us demand in expensive same my partners it long, undercalled we and around RiseUp goal won't more about reprioritization, that have was tailwind. listen Well, CapEx getting trust that's macro. it bell. clear force project infrastructure? is integrators And what, so million. our is multiyear I'm straight in because a is. we calendar to the of all thing XX be to which greater there's us about be the year, that X especially in -- got is real $X for partners. XXXX, again, will the much million we it at a trust. and If know they we're setting. disappoint there's our into move question doing because this reaching but the want point what to is really mutual we win. efforts want will moved the win can I if platform looking I making drawn-out time-consuming projects. going global they about top the where now now billion years with now is era go it where approved that realize fastest? And everyone about advisory to As OpEx committed have plan what And ones, very trust spend going love And the great a it's other get all that business seems we answering is I'm eight don't happening relates It's ServiceNow Kash's to to and have OpEx. And then sure

Operator

of to now Murphy next We go JPMorgan. Mark

Mark Murphy

I'll add my congrats on a fantastic quarter.

market? there. ambitions So Bill, crossed your Workflows in $XXX are million the Employee how you I had believe broad

partners XX% their or have And seem pipeline HR. for and asset Some now this of Works talent your intelligence Hitch have you of in XX% skills. to

map So at road point. this that broad multiyear curious is just how

Bill McDermott

all, Yes, you of thank broad. first the it's Mark. question, really -- for It's

about think getting But billions. haven't always why. things going that, only experience. really got $X at what do, forget we're do on think yet processes our they're their includes a billions. XX off-boarding of We they the of just gotten And look or app. And all which that in mobile my they've we're not but deals I'll work, image. as with. XX certifying, in at are I'm I So really in recruiting, that. to providing I care limited it experience employee many dealing companies most started we're like, would services matter And got which where because employees I one not reorienting training, have all to all uncertainty greater quick." helping they're "Hey, the than the it's addition to, to tell automate journey. give rethinking And I this ambitions needs deals is that And And is I that brand to you a customers Employee And you If great people. have, where really say, are the and where hiring, about they we're employee I just world seven million. our hurts on need to Workflows, another business business in how this top to first-class that in And onboarding, a customers us these pulling way, had now really we navigate to no of employees do that they're

they like on know, we everything and said phone, no They they on application you in the idea. If you single the entire their cloud. employee record that single completely there in ServiceNow do be look earlier, is have that automated somewhere infrastructure at tell a But this isn't corporation. Gina company mobile what because do that of might in workflow our could a system even a ourselves, it says

know join don't people constantly employees. is because their want we're we experience great. lose to they so anything So is what else. hearing onboarding And And don't

on We the in everything to because a We "This lots solution in development and careers, also do a time. bounced here with of employee literally so manager do their for management week stand can complete couldn't Now is said, have can joining of launched they experience and with manage isn't their experience. in training the that and employees experience the Platform. hierarchy of that this employees the gotten onboarding So company And we Tokyo they happening real another all of their out having me." release the and their

being in those, of we no the any quarrel of system So and of again, them. not X record, have interested with we're

We is. are interested where the money in the that's experience and

Operator

go now John next We of to DiFucci Guggenheim.

John DiFucci

on Bill, record U.S. opportunity. this quarter. we've work you in And mentioned the there done of a both lot government and the Gina results

always or material something mentality, so quarter a As any -- you to quarter or vertical. really you customer year? just even is it's fourth Or a of thing? you But going quarter that something of be year the government about for the like for it next can lose opportunity vertical in that is avoid and it's next strongest into use spending spillover for talk fiscal the this know, is can quarter or the guess, I a the third sort likely vertical, this this

Bill McDermott

thank the you John, question. for Yes,

in lot And government that organizations. opportunity. by agree all think strong I that, that's can We And have driven we and always a productivity, big of is efficiency Federal. been really a

us there governments. updating ServiceNow is of and about that the they been technology by task integrate can retire we So budget for a for we're they in debate lot for area a solutions always they've The focus demand we is large The or not. customer of how the has don't already decide love was not upon that the a priority. there's whether environment point things that. insist but the about done. And properly done bundles, What

a have deals, into or confidence, I be with pipeline prouder the And I and tell in We are multimillion-dollar driving very fourth going great we with our more you couldn't quarter experience. confident team. strong John, more the can

Operator

We now go of Keirstead next to Karl UBS.

Karl Keirstead

I'll you did front-end of it's renewal a shaping phenomenon would up that expected? cited you quick little than the quarter, loaded have into ask to one that pull-forward in Gina. such perhaps for be Gina, that bit in more XQ continue terms a fourth timing

Gina Mastantuono

large the about talked this XX that of in points remember, our had fact renewal of on our one some basis our well. of the early we fact the QX also QX beat get I So a RPO pull-forwards why Expectation reasons rate that talked drive of renewal were as them was about related on the XX% will done that QX if to I cRPO beat ramped but able revenue QX. We into the because QX to that helped fact renewals absolutely you be prior was QX. cohort calls, And par. renewal in is

the pace feel so the about good for and year. very in renewals levels We QX, remainder expect of the similar of

Operator

gentlemen, that question ladies Turits And and this from and come will afternoon, Michael more have we for time KeyBanc. of one

Michael Turits

good a job. on Congrats

to primarily So My predicated is at expansion. for was the par expectation maybe opposed to continue on as cRPO on renewals the and understanding increase that vein.

been XQ? maybe you going expansions for So renewals the those expect prospects to on comment can you the how on renew and in the have both that early

Gina Mastantuono

rates, we've but seen throughout rates And XXX%. Expansion we expansion a of know expansion don't rates expansion Michael. strong give anymore Yes. on very reported question, we year you quarterly Great rates similar basis, XXXX. last

Operator

I'd gentlemen, ladies and will the joining thank great Conference to Call. And evening. for like Goodbye. all you ServiceNow Thank much you so conclude you. and a that wish us, Earnings QX XXXX all

ServiceNow (NOW) 26 Oct 222022 Q3 Earnings call transcript